More senior oil and gas professionals in Singapore felt that their organization had been successful in achieving its cost-efficiency targets over the past year than the global average (87% versus 74% globally). Further, half of Singaporean respondents see cost management as a top priority vs 41% globally as the sector seeks to become more efficient, according to a new report published today by DNV GL, the leading technical advisor to the oil and gas industry.

The DNV GL report, A New Reality: the outlook for the oil and gas industry in 2016, is based on a survey of 921 senior sector players1 and shows that almost three quarters (74%) of Singaporean respondents agree that the industry will be successful in further reducing costs in 2016 – 9 percentage points higher than the global average of 65%.

In Singapore, 37% of respondents state that the most prioritized measure to impose stricter cost controls is to reduce headcount, up from 14% in 2015, signalling further job losses. However, 29% of respondents will prioritize optimizing the efficiency of production from existing assets.

Sixty-one per cent of Singaporean respondents (versus 59% globally) are looking to achieve greater standardization of tools and processes in 2016. Of the open-ended responses, design and manufacturing/production (both 12%) were named as the primary focuses for increased standardization during the year ahead.

Arve Johan Kalleklev, regional manager for South East Asia, DNV GL – Oil & Gas, says: “Singapore’s oil and gas professionals remain cautious about the business outlook but it is encouraging to see that the vast majority believe their organizations were successful in meeting cost-efficiency targets in 2015. However, more job cuts can be expected to control costs. The good news is that Singaporeans are balancing this with a longer-term view of cost management; optimizing the efficiency of production and greater standardization of tools and processes are being cited as important ways to drive cost-efficiency.”

Even in the current price environment, 58% of respondents in Singapore state that their organization's response to the downturn in the area of innovation and R&D is focused on creating long-term value – 9 percentage points higher than the global average.

For more than half of the Singaporean respondents (53%), the most important strategy for maintaining innovation in a cost-pressured environment is to increase collaboration with other players (compared to 45% globally). To a greater extent than their global counterparts, respondents in Singapore also want to collaborate through joint ventures (38% vs 22% globally) and have greater involvement in joint industry projects (37% vs 30% globally).

The areas prioritized for innovation or R&D in 2016 will be LNG/CNG/gas production (17% in Singapore, versus 20% globally) and mooring/FPSOs (17% in Singapore versus 2% globally).

Elisabeth Tørstad, CEO of DNV GL – Oil & Gas, says: “Innovation and collaboration are even more important in this current price environment. It isn’t just about finding the breakthrough technologies – although that’s important too - it’s also about making things simpler and more efficient and ultimately helping the industry to safely cut costs. At DNV GL, we are continuing to invest 5% of our revenue in R&D as we see this as a key enabler for sustainable long-term competitiveness,” continues Tørstad.

Other key findings include:

The share of Singaporean respondents who cited difficulties in accessing capital as one of the biggest barriers to growth (26%) was 10 percentage points higher than the global average.

Sixty-six per cent of Singaporean respondents are preparing for a sustained period of low oil prices vs 73% globally.

Fewer Singaporean respondents will put pressure on the supply chain as a strategy to impose stricter cost controls in 2016, down from 38% in 2015 to 21% in 2016 and lower than the global average of 33%, possibly indicating that suppliers have been squeezed as much as possible.

1. A New Reality: the outlook for the oil and gas industry in 2016 is an industry benchmark study from DNV GL, the leading technical advisor to the industry. Now in its sixth year, the programme builds on the findings of five prior annual outlook reports, first launched in early 2011. During October and November 2015, we surveyed 921 senior professionals and executives across the global oil and gas industry. More than a third (35%) of respondents work for oil and gas operators, while 60% are employed by suppliers and service companies across the industry. The remaining respondents come from regulators and trade associations. The companies surveyed vary in size: 40% had annual revenue of USD 500m or less, while 14% had annual revenue in excess of USD 10bn. Respondents were drawn from publicly-listed companies and privately-held firms. They also represent a range of functions within the industry, from board-level executives to senior engineers.